Looks Like LVMH Just Filed a Civil Suit Against Hermès's CEO

Looks like LVMH and Hermès are headed to court again. And this time, it's personal.

An LVMH spokesperson confirmed to WWD yesterday that the luxury powerhouse filed suit against an unidentified Hermès manager on Tuesday. While the manager's identity is not known, comments made by LVMH vice president Pierre Godé seem to insinuate that Hermès International's CEO Patrick Thomas is the target of the suit because of comments he made earlier this week.

Later that day, LVMH filed suit. Godé told French daily Le Figaro, that the charges were filed "following what was said by the manager." It doesn't take much to put two and two together.

“Hermès’s [multiple] campaigns [are] aimed to destabilize us," Godé continued in Le Figaro. "Our patience has its limits. It’s time that the public learns the truth."

Of course, the suit might also be LVMH's way of retaliating against that $13 million fine the French market authority, Autorité des Marchés Financiers (AMF), recommended it pay for gradually acquiring Hermès stocks.

And lest we forget, this is only the latest development in the ongoing war between the two luxury companies, which began in 2010 and has involved public disses and lots (and lots) of lawsuits.

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Well this is unexpected.
LVMH was recently fined $10.4 million over the way in which it acquired a 17% stake in Hermès (Hermès alleges LVMH came by the shares unlawfully, LVMH said they acquired the shares "unexpectedly"). In addition to appealing that decision, LVMH filed a lawsuit against an Hermes manager, most likely for alleging publicly that LVMH had come into its stake in Hermès in fraudulent ways. At the time, LVMH had a 22.6% stake in Hermès.
Now, LVMH has a 23.1% stake.

A new investigative report reveals some juicy new details on the methods through which LVMH came into its 22.6% stake in Hermes. And those details don't exactly support Bernard Arnault's recent claims that LVMH came into those shares "unexpectedly."

Today, France's stock-market regulator told the Hermes family that they could legally pool their holdings in order to fend off a takeover by LVMH. As we're sure you're aware, LVMH has bought 20.21% of Hermes' shares over the last few months. Although the Hermes family has kept over 70% of the company private, they still fear a hostile takeover by the luxury conglomerate, which views Hermes as what could be the final jewel in its crown. (If LVMH gets a hold of at least 33% of Hermes' shares, French law says that they must launch a bid for the rest of the shares, although there are exceptions to the rule.)
To create a separate holding company that controls over 50% of Hermes' shares--and that will be immune to LVMH's advances--the family brand needed to get permission from French regulators. The regulator has agreed to Hermes' conditions, but it's likely an association that defends minority shareholders--which in this case includes LVMH--will appeal the decision.
Despite this small victory, it's looking more and more likely that LVMH will someday control Hermes.

France's largest luxury conglomerate wants to get even more luxurious--and they're taking inspiration from a luxury brand they've been admiring for a while now: Hermès. LVMH has been buying shares in Hermès since 2010 and their unyielding interest in the heritage brand has prompted speculation that LVMH intends to one day add Hermes to their own portfolio.
For now, though, they'll settle for using Hermès as a business model in an effort to ensure that Vuitton retains its image as "exclusive" and its "high-end mystique," says a report from Reuters. The challenge Louis Vuitton faces, along with many widely recognizable name brands who feature heavily in rap songs and knock-off operations, is expanding and increasing profits without seeming too mass or attainable, especially given the ubiquity of their signature monogram. Their solution is to just keep providing even more expensive products and services that even fewer people can afford--like artisanal made to order handbags (that won't look like Canal St. knock-offs)--and a more exclusive shopping experience.